HHS’ Vision Casting and the Private Sector’s Positive Response

Guest post by Ken Perez, vice president of healthcare policy, Omnicell.

Ken Perez
Ken Perez

We’ve often seen the U.S. federal government announce its intent to drive major changes in the way the healthcare system is run, only to have the private sector respond in a tepid or negative manner.

That was not the case at a January 26 Department of Health and Human Services meeting, at which HHS Secretary Sylvia M. Burwell announced concrete goals and an aggressive timeline for moving Medicare payments from fee for service to fee for value. Nearly two dozen leaders representing consumers, insurers, providers and business leaders were in attendance and clearly supportive of the vision cast by Burwell. Notably, high-ranking representatives from the American Academy of Family Physicians, the American Medical Association, the American Hospital Association, and America’s Health Insurance Plans (AHIP) were among the participants.

The announcement was a landmark one. For the first time in the history of the Medicare program, HHS has communicated quantified goals for pushing a significantly greater share of Medicare payments through alternative payment models, such as accountable care organizations (ACOs) and bundled payments. Such payments will rise from 20 percent ($72.4 billion) of Medicare payments in 2014 to 30 percent ($113 billion) in 2016 and 50 percent ($213 billion) in 2018—a compound annual growth rate of 31 percent over the five-year period.

Furthermore, HHS aims to tie 85 percent of all fee-for-service Medicare payments to quality or value by 2016, and 90 percent by 2018, via programs such as the Hospital Value-Based Purchasing Program and Hospital Readmissions Reduction Program.

To support the achievement of these two goals, as well as to promote the broader adoption of alternative payment models by health plans and Medicaid programs, HHS is establishing a Health Care Payment Learning and Action Network. Through this new organization, which will launch in March, HHS will work with private payers, employers, consumers, providers, states and state Medicaid programs, and other partners to add alternative payment models into their programs.

Given the HHS announcement, it is clear that the Centers for Medicare & Medicaid Services (CMS) will need significantly increased provider participation in the Medicare Shared Savings Program in the future. In order to reach its goal of having half of Medicare payments flowing through alternative payment models by 2018—assuming in the future similarly sized ACO patient populations as at present—there will need to be a total of 800 to 900 Medicare ACOs four years from now, about double the current number. To encourage such strong growth, CMS will probably go along with the most substantive changes to the December 2014 proposed rule to modify the MSSP that were requested by provider organizations.

The health insurance industry is clearly on board with the HHS vision. In addition to AHIP, there were representatives from Aetna, Anthem, the Blue Cross Blue Shield Association, Health Care Service Corporation (HCSC), Humana, and UnitedHealthcare at the meeting. Also, the creation of the Health Care Payment Learning and Action Network clearly signals more public-private collaboration in support of commercial ACOs, which currently total between 300 anf 350.

On January 28, with the dust still settling after the HHS announcement, 16 provider organizations—including Advocate Health Care, Ascension Health, Dartmouth-Hitchcock Health, Dignity Health, Partners HealthCare, SSM Health, and Trinity Health—and four large commercial payers—including Aetna, Blue Cross Blue Shield of Massachusetts, Blue Shield of California, and HCSC—announced the formation of the Health Care Transformation Task Force (HCTTF), whose members have committed to putting 75 percent of their business through value-based payment arrangements, such as ACOs, by 2020.

In view of the broad range of influential healthcare leaders at the HHS meeting and the formation of the HCTTF, it’s evident that HHS’s ambitious vision to fundamentally change the way much of healthcare will be paid for applies not just to Medicare beneficiaries, but for all Americans. HHS clearly recognizes that accomplishment of the vision will depend in large measure on the support and involvement of healthcare providers and payers.

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